Ratios 2022-23 2021-22 Increase : (Decrease) Remark
Interest coverage ratio 447.50 317.67 41% Negligible debt and interest cost; the
Company is effectively Debt-to-equity ratio - 0.02 (100%) operating at zero debt. Return
on net worth (%) 12.40% 15.15% (18%) -
Atul Ltd has identified two reporting segments, namely, Life Science Chemicals and
Performance and Other Chemicals.
Life Science Chemicals segment
Crop Protection
Product groups: herbicides, insecticides, fungicides, others
The products falling under these product groups are used by customers belonging to the
Agriculture and Crop Protection Chemicals industries. The product groups comprise 34
products and 70 formulations. 2,4-D, Indoxacarb, Isoprothiolane and Sulfonylurea
herbicides are some of the key products.
During 2022-23, sales increased by 25% from Rs. 924 cr to Rs. 1,151 cr. Sales in India
increased by 11% from
Rs. 374 cr to Rs. 416 cr; bulk sales in India increased by 10% from
Rs. 198 cr to Rs. 218 cr whereas retail sales, which is currently only in India,
increased by 12% from Rs. 176 cr to
Rs. 197 cr. Sales outside India increased by 34% from Rs. 550 cr to
Rs. 735 cr and formed 64% of the total.
17%. The Company completed two projects and undertook one project for
implementation. The size of the world crop protection market is estimated to have
increased from US$ 65.2 bn in 2021 to
US$ 69.3 bn in 2022. The main attributing factors for this are strong commodity prices,
and high agrochemical prices resulting from disruption in the global supply chain.
The world crop protection chemicals market is expected to grow at a CAGR of 6% from 2023
to 2030, driven majorly by the rising consumption of food across the globe due to the
increasing population. The Company will participate in this growth by - i) improving
internal efficiencies and working capital management, ii) promoting retail sales, iii)
expanding the product portfolio and securing more registrations, and iv)evaluatinginvestmentopportunities
in vertical integration.
Floods or famines may adversely affect the demand. Fluctuations in foreign exchange may
impact sales realisations. Given that some of these chemicals can be hazardous, it is
essential to take due care in their manufacture and use. Registration costs are high in
certain countries. Also, geopolitical developments leading to supply chain disruptions and
high cost of some of the main raw materials can impact profitability the of the business.
Pharmaceuticals and Aromatics – I
Product groups: active pharmaceutical ingredients and its intermediates, others
The products falling under these product groups are used by customers belonging to the
Pharmaceutical industry for various therapeutic categories such as antidepressant,
antidiabetic, anti-infective, antifungal, antiretroviral and cardiovascular. The
product groups comprise 90 products. Acyclovir, Dapsone, Desvenlafaxine, Fluconazole,
Valacyclovir and Venlafaxine are some of the active pharmaceutical ingredients (APIs)
while carbamoyl, carbonates, chloride derivatives and chloroformates are some of the key
intermediates.
During 2022-23, sales increased by 10% from Rs. 510 cr to Rs. 559 cr. Sales in India
increased by 3% from
Rs. 307 cr to Rs. 315 cr. Sales outside India increased by 20% from Rs. 203 cr to
Rs. 244 cr and formed 44% of the total sales. Degrowth on account of volume was 5%.
Sales was partially impacted due to fire plant is fully insured, and the claim is
gradually being realised. The Company completed one project at the Atul site. Sales of
Atul Bioscience Ltd (ABL), a 100% subsidiary company, increased by 25% from Rs. 126 cr to
Rs. 158 cr. However, due to price pressure and new product regulatory filings, there
was a contraction of operating margins. During 2022-23, one of the sites of ABL completed
regulatory inspections from the United States Food and Drug Administration and Health
Canada without any critical : major observations.
The size of the world Pharmaceutical industry is estimated at US$ 1.5 tn during 2022
and is estimated to reach US$ 1.7 tn by 2025, of which the conventional pharmaceutical
segment is estimated to be US$ 1.1 tn. The size of the world API industry is estimated to
be US$ 195 bn during 2022 and is estimated to reach US$ 25 bn by 2026. Biologics are
estimated to have contributed about 52% of sales of the top 100 products during 2022,
while oncology will remain the largest therapy area with sales growing at about 12.7%
CAGR. The Company along with ABL will participate in this growth by – i) increasing
manufacturing efficiencies, ii) debottlenecking and adding capacities, iii) introducing
new products and iv) forming long-term strategic alliances with other companies.
The price and demand of some products have seen inconsistency and are likely to
vary widely over the short-term. Fluctuations in foreign exchange may impact sales.
Performance and Other Chemicals segment consists of four sub-segments, namely,
Aromatics-II, Bulk Chemicals and
Intermediates, Colors and Polymers.
Aromatics–II
Product groups: intermediates, perfumery, others
The products falling under these product groups are mainly used by customers belonging
to Fragrance and Personal Care industries. The product groups comprise about 41 products. para-Cresol,
para-Anisicaldehyde and para-Cresidine are some of the key products.
During 2022-23, sales decreased by 3% from Rs. 786 cr to Rs. 766 cr. Sales in India
increased by 27% from
Rs. 251 cr to Rs. 318 cr. Sales outside India decreased by 16% from Rs. 535 cr to Rs.
448 cr and formed 58% of the total sales. The decrease in sales on account of volume was
17%. The Company completed one project during the year.
The world market for para-Cresol (a key product) is estimated at 70,000
MT and is growing at about 2%. Though earlier the product used to be manufactured in the
UK and the USA, China and India are now major suppliers of the product. The size of the
world Fragrance industry is estimated at US$ 16 bn and is growing at about 5%. The size of
the world Personal Care industry is estimated at US$ 490 bn, of which personal care
ingredients segment is US$ 28 bn and is growing at about 5%.
The main user industries, namely, Fragrance and Personal Care are growing well due to
an improved standard of living. The Company will participate in this growth by - i)
broadening its market reach, ii) increasing its manufacturing efficiencies,
debottlenecking and adding capacities, iii) introducing new products and iv) evaluating
inorganic growth opportunities.
Fluctuations in foreign exchange may impact sales realisations.
Bulk Chemicals and Intermediates
Product groups: bulk chemicals, adhesion promoters, others
The products falling under the bulk chemicals product groups are mainly used for
internal consumption, while the products in the intermediate product groups are used by
customers belonging to the Cosmetic, Dyestuff, Pharmaceutical and Tyre industries. The
product groups comprise 23 products. Resorcinol, Resorcinol–formaldehyde resin and
1,3–Cyclohexanedione are some of the key products.
During 2022-23, sales remained stagnant - Rs. 312 cr in 2021-22 and
Rs. 315 cr in 2022-23. Sales in India increased from Rs. 183 cr to Rs. 188 cr while
sales outside India decreased from Rs. 129 cr to Rs. 127 cr. Sales outside India formed
40% of the total. Growth on account of volume was 2%. The world market for Resorcinol (a
key product) is estimated at US$ 578 mn and is growing at about 2.5%. The size of the
world Tyre industry is estimated at US$ 267 bn and is growing at about 8%. The size of the
world Chlor-alkali industry is estimated at US$ 69 bn and is growing at about 4%.
The Tyre industry is projected to grow supported by the resurgence in Asia
Pacific. The captive consumption of bulk chemicals is expected to grow as the Company
expands the manufacturing capacities of various products. The Company will participate in
this growth by - i) increasing its manufacturing efficiencies, ii) debottlenecking and
adding capacities, iii) introducing downstream products and iv) widening its market reach.
The demand and price of bulk chemicals are cyclical in nature. Fluctuations in foreign
exchange may impact sales realisations.
Colors
Product groups: dyestuffs, pigments, dye-intermediates, textile chemicals, others
The product groups comprise 450 products. The products are used by customers belonging
to the Textile, Paint and Coatings and Paper industries. Vat Green 1, Sulphur Black
1 and Pigment Red 168 are some of the key products.
During 2022-23, sales decreased by 22% from Rs. 802 cr to Rs. 624 cr. Sales in India
decreased by 18% from
Rs. 401 cr to Rs. 330 cr. Sales outside India decreased by 27% from Rs. 401 cr to
Rs. 294 cr and formed 47% of the total. The decrease in sales on account of volume was
26%. Fluctuation in cotton prices affected the competitiveness of textile producers
engaged in exports.
High inflation in textile importing countries and higher inventory levels across the
textile value chain further impacted the demand of textile dyes and chemicals. This in
turn affected the selling prices and margins of dyes and chemicals. Denim producers were
particularly affected leading to much lower capacity utilisation, which affected the sales
of Sulphur black. Lower demand for exterior paints in Europe and other markets contributed
to a significant high-performance pigments. Rudolf Atul Chemicals Ltd (RACL), a joint
venture company formed in 2011-12, provides a complete range of textile chemicals in the
Indian market; its sales decreased by 8% from Rs. 121 cr to
Rs. 111 cr, primarily because of volume.
The size of the world Textile Dyestuff industry is estimated at US$ 6.6 bn and is
expected to grow at about 3% in the coming years. China continues to be the largest
manufacturer of dyes followed by India. The world market for high-performance pigments is
estimated at US$ 5.9 bn (constitutes both organic and inorganic pigments) and is expected
to grow at about 4% in the coming years.
The main user industries, namely, Textile, Paper, Paint and Coatings will continue to
be influenced by macroeconomic and geo-political factors. The Company along with RACL is
expected to grow by - i) improving capacity utilisation and managing cash flows ii)
introducing new dyes and textile chemicals, iii) developing newer applications for
existing products and iv) broadening the market reach in new geographies. Fluctuations in
foreign exchange, high inflation in export markets, low demand and competition from China
may impact sales realisations. Treatment costs are expected to remain high because of
stricter regulatory norms and increasing demand for the implementation of green chemistry
principles and ESG compliance.
Polymers
Product groups: epoxy resins, curing agents, reactive diluents, sulfones, protective
paints, epoxy sealants, tapes and adhesives based on epoxy, synthetic rubber,
polyurethane, cyanoacrylate, PVC and PVA
The products falling under these product groups are used by customers belonging to the
Adhesives, Aerospace and Defence, Automotive, Composites, Construction, Electrical and
Electronics, Food and Beverage packaging, Footwear, Marine, Paint and Coatings, Paper,
Sport and Leisure, Transport and Wind Energy industries. The product groups comprise 47
synthetic products and 268 formulations. Liquid epoxy resins, solid epoxy resins, solvent
cut resins, cycloaliphatic resins, epoxy phenol novolac, multifunctional resins, aromatic
amines and their adducts, 4,4-Diaminodiphenyl sulfone and 4,4-Dichlorodiphenyl sulfone
are some of the key products.
During 2022-23, sales decreased by 2% from Rs. 1,546 cr to Rs. 1,513 cr. Sales in India
decreased by 2% from
Rs. 945 cr to Rs. 927 cr; bulk sales in India decreased by 7% from Rs. 751 cr to
Rs. 700 cr, whereas retail sales increased by 17% from Rs. 194 cr to
Rs. 227 cr. Sales outside India decreased by 3% from Rs. 601 cr to Rs. 586 cr and
account of volume was 7%.
The world market for epoxy resins and curing agents is estimated at US$ 12 bn
and is growing at about 3%, while the Indian market is estimated at US$ 380 mn and
is growing at about 6%. Seven major companies dominate the world marketplace. The world
market for sulfones (curing agents) is estimated at US$ 393 mn and is growing at about 6%.
The user industries, Construction, Defence, Electrical and Electronics, Paint and
Coatings are growing well, particularly in India. The Company will participate in this
growth by – i)improvingmanufacturingandworking capital efficiencies, ii)
debottlenecking and adding capacities, iii) introducing new products and iv) widening
market reach in new geographies.
Cheaper imports and new entrants in the market will keep the market competitive and may
keep margins under pressure. Since the two main raw materials, namely Bisphenol-A and
Epichlorohydrin, are imported, fluctuations in foreign exchange may impact margins.
Internal Control Systems
The Company has comprehensive internal control systems commensurate with the nature
audit observations of its business, its size and the complexity of its operations. They
provide reasonable assurance on the effectiveness and efficiency of its operations,
reliability of financial reporting and compliance with the applicable laws and
regulations. The internal control systems that deploy an amalgam of modern and traditional
processes are routinely tested and upgraded for both design and operational effectiveness
by the Management and the same is audited by the Statutory Auditors.
Significant follow-upactionsandrecommendations thereon are also reported to the Senior
Management and the Audit Committee for their review.
Internal Audit
The Company has an in-house Internal Audit department which includes professionals from
finance and engineering disciplines and is also working with reputed audit firms
specialising in internal audits
Together, they have the responsibility to identify areas requiring control
enhancements, automation and implementation of leading practices for the Company, its
subsidiary, joint venture and associate entities and also Atul Foundation and the entities
overseen by it.
The annual internal audit plan is reviewed and approved by the Audit Committee to
ensure adequate coverage. Progress of the internal audit plans, significant and the status
of agreed actions are reviewed by the Management on a monthly basis and by the Audit
Committee on a quarterly basis.
Enterprise Risk Management
The Company believes that risks are inevitable in any business and its approach is to
identify, track and mitigate instead of avoiding them. Enterprise risk management (ERM) is
an integral part of a business and its framework includes the identification,
classification, assessment, prioritisation, mitigation, monitoring and reporting of key
risks.
The Company has adopted a bottom-up and top-down approach
. to drive ERM. The bottom-up approach includes the identification and regular
assessment of risks by respective businesses and cross-functional teams and
a plan for mitigating such risks in a structured manner. This is complemented by a
top-down approach where the Senior Management ensures comprehensiveness of framework,
effectiveness of mitigation measures and assesses long-term and macro risks. Risks are
consolidated under major risk themes to create focus areas and prioritise mitigation
plans. The Company has constituted an ERM council comprising Senior Management officials
to ensure adoption of a comprehensive framework and effectiveness of mitigation measures.
ERM is driven by the Board of Directors through the Risk Management Committee of the
Board.
Human Resources
The biggest asset of the Company are its people; it is promoting a culture that
empowers its people to be the best version of themselves essential to foster high
engagement and consistent improvement in performance. It is creating a learning
organisation and building end-to-end capabilities to be future-ready as its businesses
further evolve and expand – it is committed to pervade technology in all its HR
processes. During 2022-23, the Company took four key people related initiatives: i)
leveraging learnings through the period of COVID pandemic, it introduced flexi-time at
Atul site, made four Saturdays per month off for locations other than its manufacturing
sites and further liberalised medical reimbursement via medical insurance for its entire
workforce, ii) it concluded a earlier three-year) with the union at Ambernath site of Atul
Bioscience, iii) it commenced adding HR team members in businesses and functions so as to
take the decision-making closer to where it is most required, iv) it digitalised
recruitment process (that is from recruitment to selection); digitalisation of recruitment
process post-selection is under progress.
One of the key tests for the Company is to develop internal leadership pipeline and
ensure that a much smaller number joins from outside in senior positions. This need is
being addressed in five ways: i) preparing and executing development plan, ii)
interactions with higher management, iii) participating in functional and cross-functional
projects, iv) self-learning, v) attending courses (related to functional and people
leadership). This will be further supported by an enhanced performance management system
and improved promotion process. HR is also working with
-year settlement internal functional and cross-functional teams to bring further
clarity on the roles for better delivery of performance. Employee relations at all
locations remained cordial. The number of team members in the Company increased from 3,449
to 3,528 – the number comprises its own team members and those working for its retail
businesses, information technology and finance via four subsidiary entities, namely Atul
Crop Care, Atul Consumer Products, Atul Infotech and Atul Finserv. The number excludes
team members in associate, joint venture and other subsidiary entities.
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